Cutting Saturday Mail Delivery? Sure, If It Makes Good Business Sense.

from the kramer-wants-to-cancel-his-mail dept

With a loss of $3.8 billion last year, the US Postal Service is facing a challenging business climate. Mail volume fell to 177 billion pieces for 2009, from 203 billion a year before. Outside consultants have estimated a deficit of $238 billion in the next decade. So, the postal service is now considering making many changes to its business, including cutting Saturday delivery from its regular service in an effort to reduce this shortfall. Eric Zorn, of the Chicago Tribune, goes further and asks "Why stop at Saturday?" Sure, with the advent of the digital age, less and less things really need to be sent in the physical realm. However, don't be so quick to write off the USPS. The postal service still did $68 billion in annual revenue for 2009, which is bigger than either UPS or FedEx. At 44 cents, first class mail is still one of the best deals around -- sending a 1 ounce object anywhere in the country within a few days for that amount of money is a modern marvel. Of course, considering that one-third of USPS revenue comes from advertising mail, any change to delivery windows or rates will surely generate flak from that industry. That said, the USPS has had a history of profitability, so these changes just reflect a desire to return to that state, which is good practice for any business, whether they are in the public or the private sector.

Reader Comments

the USPS as a business? not so sure

Easy solution -- don't cut Saturday delivery, just spread deliveries out. Noone needs mail _every_ day anyway -- so maintain the same routes, the same logistics, everything...just deliver once every other day. Monday, Wednesday, Friday for one route, Tuesday, Thursday, Saturday for another. Cut your carrier staff in half (and your sorting staff significantly as well). I think we can all wait an extra day for that junk mail -- if it's urgent it wouldn't have been mailed in the first place.

Of course, the USPS can never do this -- because it's NOT a business and cannot _really_ be run like one...

"so these changes just reflect a desire to return to [profitability], which are is good practice for any business, whether they are in the public or the private sector"

I'd have to disagree there (and I bet so would Mike) -- Exhibit A: the USPTO.

"At 44 cents, first class mail is still one of the best deals around"

And how do we know this? Lest we not forget they have a monopoly on mailboxes (and are none-too-shy about enforcing it).

Re: the USPS as a business? not so sure

They don't have a monopoly on mailboxes. I'm absolutely allowed to add additional boxes on my property for anyone I want to use in any way I want. whether it's a small box for a newspaper (fat chance) or a large box for deliveries (woot, books).

Good Deal

I'm no Fed-fan, but I have to side with the USPS on this one. We have family in other countries and compared to their mail systems, ours is a gem. I've heard many first hand experiences of a letter costing more than a $.44 equivalent and taking two or more weeks to reach the other side of the same city. I don't even want to start on international mail delays. What I "might" change, however, is which day to stop delivery. Isn't the USPS the only service that delivers on Saturday? Could this be a competitive advantage?

Mail

Calls to go to a 5 business day week have been made for years, something like 20 years ago the post office went to half days on Saturday. So really this is not a new idea.

As it is against the law to go into direct competition with the post office, I don't see things getting better.
The post office has no efficiencies other than direct first class mail. If you have ever used their tracking program you will find that it's not updated very often, sometimes not until days after you package is delivered.
Internal costs are high with no incentives to reduce them.

Large circulation mailers get lower rates than smaller ones, which is fine if it were not a government sanctioned monopoly. But this does not help the bottom line.

Let's face it the post office started it's long march into death when UPS and FedX were allowed to use large (Heavy) aircraft to move packages.

If a private company were allowed to compete with letter type shipments the post office would die.

from wiki

Until 1912, mail was delivered 7 days a week. As the postal service grew in popularity and usage in the 1800s, local religious leaders were noticing a decline in Sunday morning church attendance due to local post offices doubling as gathering places. These leaders appealed to the government to intervene and close post offices on Sundays

USPS

Quitting Saturday could be a major mistake, FEDEX and/or UPS could swoop in and take over Saturday which could lead to businesses quitting USPS all together. What about Netflix, and medical supply companies whom people depend on for timely delivery. What happens during the holidays when USPS is already overloaded with mail? I think the USPS needs to cut prices and improve service to win package delivery back from UPS and Fedex. Hire part time people to do Saturday deliveries, trim management. When I worked at USPS in the 80's there were always shirt & tie people standing around doing nothing, herds of them. Nobody ever knew what their duty was

I think you might be looking at this the wrong way. The important question is not whether or not the USPS is taking in more money than it costs to run, but whether it offsets its running costs with the benefits it provides to the US economy. It is seldom possible for a natural monopoly to achieve both.

Re: Lets see.

Advertising is already expensive, and people have been doing less of it, meaning less money for USPS. If you raise prices more, more people will stop using it, leading to less profitability, not more. That's the opposite of what they want to do.

I know that it took the time before last stamp price being raised for my store owner to finally give into my pleases to use MailChimp to send targeted e-mails at $0.07 each, instead of $0.40 each, plus the cost of printing and paper. Now he's a convert to the Internet. Cheaper and better response.

Anyway, the point is that raising prices for adverts is going to cut profitability for USPS and raise the amount of advertising mail in your e-mail inbox. Bad for everyone.

Re: Re: Lets see.

I don't think either of those is the case. If there is less advertising then there is less need for staff. If the price of advertising goes up then only advertising that stands a chance of affecting me will be sent (it's too expensive otherwise). So me, the USPS and advertisers all win.

If in turn we start to get more spam, well spam doesn't waste paper, it can be dealt with in about half an eye blink and we all have filters specifically to deal with this issue. It's not smallpox come to the New World, this is a problem we're used to.

YEP

THINK about adverts coming to your door, with a 'NUMBER to call' to CANCEL the advert. so the company wont loose money..
That would be wonderful..
Also they would ONLY send advert if they had a REAL DEAL..

Re: Re: Re: Lets see.

My understanding is it's almost impossible to fire a federal employee. So if the USPS starts having less work to do, they'll still have the same number of employees to do it, just less money coming in to pay them with.

Re: Re: Lets see.

I'm not an American, so I can't really comment on what it is like in terms of economic climate post GFC over there, but I hear it's pretty bad still, although it is recovering. Therefore I think Dean's idea for USPS to sack nearly half its workforce (assuming that delivery persons make up the bulk of the workforce) would be a very bad idea. The idea to cut Saturday would have the effect of reducing their costs, but still employing the same number of people, assuming they aren't on fixed salary.

I also find erv's suggestion that medical supply companies (or more specifically, their customers) rely on the postal service, rather then registered couriers for urgent deliveries to be alarming. If something is urgent, then a postal service is not how it gets sent. I also disagree with his comment about Netflix. Netflix in terms of being a mail-order system has never been about having a movie right then to watch, it has always been about having the movie for as long as you want with no late fees. All a lack in Saturday deliveries would mean for Netflix customers would be they would have to organize their weekend viewing on Thursday rather then Friday (assuming 1 day delivery times), hardly a difficult task for most grown responsible adults.

I agree with your point Jake that the contribution to the economy of a cheap postal service is essential, but it is also really beside the point if it is not able to run because it can't afford to meet its costs.

Re:

Fair point. What I was trying to say is that some services cannot be cut, or increased in price further without causing harm. At that point it becomes necessary to subsidise them out of the federal tax budget if they cannot be made directly revenue-neutral, though this should definitely be a last resort.

Saturday Delivery is a FEATURE

The number one reason I mail things at the post office versus using FedEx or UPS IS the Saturday delivery. That is often times the only feature that makes 2-3 day priority mail a better bet time/money wise than just FedEx or UPS.

What the post office really needs to do is compete in the same areas that UPS and FedEx do; really cheep stupidly slow package delivery.

I could see paying a dollar per pound extra to get my package in 4 business days or less instead of the 5-7 it takes UPS or whatever similar slowness it is for FedEx.

While on the subject of features, how about adding one that reduces miss-delivery?

Create a Globally Unique ID for each individual and corporate position in the US. Allow me to change the address at will, with the expectation for mail to follow within the week. Now all my relatives only need send first class mail to one 'address' reference regardless of how often I have to update it. My bills and anyone else that wants to communicate can just mail to that.

Plus as an added bonus, a one time boost to the economy would occur as various mail-product vendors would suddenly have to connect to the online database and query to find the current real-address associated with a target's identifier. A massive upgrade to equipment, or more jobs for those manually looking up addresses.

Just to prevent spammers abusing the system, a bunch of fictitious names and locations should be randomly generated based on invalid entries.

What Is To Be Done.

Here are some practical proposals for the Post Office:

1. Deliver mail from Tuesday to Saturday to the full mail route. Large mailers, with mailing lists in the hundreds of thousands or millions of addresses, will of course coordinate with the Post Office, and plan backwards from the desired arrival date to determine when to print things and when to deliver them to the Post Office. They will make reservations, in short, in exchange for discounts.

2. People who want their mail on Monday should be able to pay a special fee (and thereby cause their nine-digit ZIP codes to be entered into the computers which control the sorting machines), and they could send someone to the central post office to collect the mail. At present, the Post Office requires people who receive really a lot of mail, eg. certain mail-order firms, to set up Post Office Boxes (or "Call Numbers," which are effectively virtual Post Office Boxes). Businessmen will of course pay this fee, and send their secretaries to the Post Office, because they want to cash their receivables faster. They need to have their receivables early enough in the day to take the enclosed checks to the bank by the bank posting deadline, typically two in the afternoon. This will account for most of the non-bulk, non-presorted mail. Of course, at present, to get the various discounts for bulk mail, it has to be mailed at a central post office, within regular business hours.

3. Create part-time jobs to go and empty collection boxes every evening, Sundays and Mondays included, ie at the last possible moment before the mail would miss a sorting/delivery deadline. The Post Office already has two hundred big central sorting centers. The staff of these centers, who account for only a small fraction of postal employees, already work the graveyard shift to more speedily process the mail. We would simply extend this system out to the collection mailboxes. The Post Office has about 175,000 collection boxes, most of them located beside through streets, or in shopping centers, and it ought to be possible for someone who does nothing but empty collection boxes to do one every five minutes, or twelve an hour. That would be about fifteen thousand hours a day, or seven thousand people on a two hour shift from seven to nine in the evening. Bearing in mind that the Post Office has more than six hundred thousand career employees, this is insignificant.

4. In many cases, it would be helpful for the Post Office to educate small businessmen about how to produce fully machine-readable customer-reply envelopes, with barcodes and all. Many small businessmen are too small to employ IT professionals, and their business practices are correspondingly backwards.

Mind Blowing

It blows my mind how little discussion there is on the true problem here - the USPS has a government monopoly on first-class mail for no other reason than because it is the government and gets favors. Why on Earth would we cut Saturday mail when we could simply eliminate the monopoly and get both Saturday and Sunday mail?

80% of the USPS's costs are in their workforce, which is completely unionized and provided with benefits at the expense of the taxpayers far above those in the private sector. The answer is not to continue to pay a shitload for awful service and then watch as postmen retire early and feed off the public, but to privatize it and open up first-class mail to competition.

Re: Mind Blowing

One day a week

All I get in the mail is my magazines, bills, Adds, and the occasional holiday card. I open the mailbox every day, grab the mail, and throw it in a pile until the weekend and go through it then. Getting it all on Friday would be a nice change. Honestly, My bills are all going paperless, my bank statements are paperless. I would love to stop getting all the junk mail and if it was once a week every place I get something from more then once a week would only have to send it once.

You know the other day we had something that was supposed to ship to some place within this county. A couple of days later the intended recipient didn't get the package. So we go to the website to check its location and we find out that the packages is HALF WAY ACROSS THE COUNTRY. It wasn't supposed to leave the county, but now it was finally heading towards its destination. We called the postal office and they confirmed it was in some state half way across the U.S. It took a few more days before it finally reached its destination.

U. S. Postal Service.

It would be a waste to make a suggestion that made sense because we are dealing with an agency of the U. S. Government and it can't be done if it makes sense. There is rarely a time that I go to the post office and stand in line to mail a package that I do not make someone in line with me aware that they can go to the other end of the building for the pickup window and not have to wait for the window to open that handles outgoing mail. Sometimes the person opening it at 830am says, "If you're just here to pick something up, go to the other end of the building". However, if they don't, that person could conceivably continue to stand in line for another 15 or 20 minutes. I have made the suggestion that they put up a sign that you can't miss if you're standing in line, directing you to the pickup window, but no one will do anything about it.....need I remind you, IT MAKES TOO MUCH SENSE

post office mail on saturdays

Americans are stupid. Take some more jobs away from the People that are trying to make ends meet.So they could turn to welfare making taxes go higher. Way to go--America. There goes some poor guys part time job. Like walmart and their automatic cashier system. How many pople ended up unemployed as a result of that!?! I blame this all on computers, though it is a wonderful thing to have it has really taken over America. Way to go Steve Jobs---I am sure you are not hurting (financially).

It's the same here..

It is the same here in the UK, the Royal Mail has been closing post offices for years in an attempt to streamline and move with the times. For some villages and outlying towns they have to drive for miles to the nearest place to mail.
They are now trying to modernise the postal service here and are about to start offering a huge range of other products to try and find another way of making it a viable business... otherwise the "Queen" may privatise it! ha

post office mail on saturdays---vinnie

vinnie, Apr 24th, 2010 @ 11:10am quote
"Americans are stupid. Take some more jobs away from the People that are trying to make ends meet".
Vinnie, chances are no one is going to lose their job. Most government employess are salaried,so even if a day or 2 of mail service were cut,they'd still make the same money.
The automatic cashiers in the stores I have been to are rarely used,as having a real human cashier is much more convenient9is slow at times).Plus, you can't write a check at an automatic without a "real person" approving it.
As for job loss, there have only been 3 to 4 cashiers on duty at any given time at the Walmart near us(except for Black Friday and the day after Thanksgiving).
And yes, Americans may be a bit flawed,and at times led astray,but for the most part we're a fairly intelligent group of people.
If ya don't like it here, try Ethiopia,where all you have to do is worrying about starving to death..or Haiti or any number of countries not run by the US goverment.
Then tell us again how stupid we are and how bad you really think you have it.